Governmental Affairs News

Friday, February 13, 2015

Democrats make paid sick leave a priority

House and Senate democrats have introduced paid sick leave legislation and made it a priority issue for their caucuses. The legislation, HB 4167 and SB 101, would require employers to grant one hour of paid sick leave for every 30 hours worked up to up to 40 hours per calendar year for employees of a small business (those with 10 or fewer employees) and 72 hours for all other employees. There is no limitation on paid sick leave earned whether an employee is full time, part time or seasonal.

Paid sick leave would carry over from year to year, but a small business is not required to permit an employee to use more than 40 hours, and other employers are not required to permit an employee to use more than 72 hours, of accrued paid sick leave in a single year. For paid sick leave of more than three consecutive days, the employer may require reasonable documentation from a health care professional or a police report. If acquiring documentation presents a cost to the employee, the employer must also pick up the cost of obtaining the required documentation and cannot withhold pay while waiting for proper documentation. Employees would retain any accrued paid sick time while working for the same employer in any role or location. Employers are not required to provide financial or other reimbursement for unused paid sick leave hours upon an employee’s termination, resignation, or retirement.

Under the proposed legislation, benefits could be used to recover from mental or physical illness, get medical treatment, care for another family member, to get physical or mental treatment as a victim of domestic violence or sexual assault, or to care for family or children if workplaces or schools have been closed due to a public health emergency. The legislation defines that rights extend for the care of partners in domestic partner relationships.

HB 4167 has some bipartisan support since the House Health Policy chair, Rep. Mike Callton (R-Nashville) signed on as a cosponsor. While it seems unlikely that the current Legislature will take up the legislation, MRA will be keeping a close eye on the proposal and any possible 2016 ballot initiatives.

Revenue shortfall puts pressure on budget
Gov. Snyder released his executive budget recommendations this week including suggestions to fill an estimated $330 million shortfall in the current year General Fund budget. The shortfall is attributed to tax credits granted between 2003-2010 under the Michigan Business Tax that are still being claimed. The 15-16 budget focuses on general fund reductions, methods to deal with Medicaid reimbursement funding issues, fee increases, an increase in skilled trades funding, increases for colleges and K-12 schools, expansion of dental coverage for low-income children, and a focus on developing early reading skills.

After a recent combination of the Department of Community Health and the Department of Human Services, the combined budgets make up $23 billion of the $54 billion state budget. To balance the budget, Gov. Snyder has suggested ending the current support of the Graduate Medical Education program through the state’s general fund and instead assessing hospitals to fund the program. The governor also suggested increasing the Health Insurance Claims Assessment (HICA) from 0.75% to 1.3%.

HICA has brought in less revenue than expected presenting a gap in Medicaid funding several years in a row. The fund has failed to raise its projected $400 million, coming in closer to $250 million. The HICA program is supposed to generate the most potential federal funding for hospitals after fear the federal government would disallow the use tax. The federal government has since disallowed use of the use tax, so HICA is likely the long-term solution.

However, HICA is unpopular with the business community, since it raises the cost of claims. Last year’s reinstatement of HICA was a tough sell, making an increase a difficult proposal to swallow that will likely require months of debate.

Other important items to note:

  • Cloud computing: HB 4018 and 4019 which formally exempt subscription software accessed from another person’s server from sales and use taxes were reported by the House Tax Policy Committee on February 11.

  • Wage garnishment: HB 4119 and 4120 which provide employers with some protection from the wage garnishment process were unanimously approved by the House Commerce Committee on February 10. The bills increase the fee that creditors pay employers to administer garnishments, from a $6 fee to a flat $35 fee. They also specify that a Writ of Garnishment would continue until the debt is paid off and establish a procedure before a creditor can take a default judgment against the employer for the full bad debt of an employee.

  • Adoption leave time: Legislation that would grant adoptive parents paid time off (similar to time off to care for a newborn child) was introduced on January 15. Adoptive parents would be allowed four consecutive weeks of birth or adoption leave time for employees that have been employed for at least one year and 1,250 hours within the last year. HB 4024 was referred to the House Commerce and Trade Committee. There is bipartisan interest in the bill and the committee will likely take up the bill for discussion. 

  • Used mattress sales: Sen. Morris Hood III (D-Detroit), reintroduced legislation from last term that would make advertising or selling a mattress as new or custom-made that includes any material or components from a used mattress a violation of the Michigan Consumer Protection Act. SB 107 was referred to the Senate Regulatory Reform Committee, but is unlikely to receive a hearing.

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